The easing of travel restrictions to and from the UAE will further boost the recovery of the country's aviation and hospitality sectors this year, according to Abu Dhabi Commercial Bank.
Requirements governing travel to the UK and India, two of the UAE's top source markets, have been relaxed and this is expected to draw more tourists to the Gulf nation and improve transit flows, the lender said in its weekly economic research report.
"There has been an easing in a number of travel restrictions relating to the UAE over the last week, which should be positive for a further recovery in the important aviation and hospitality sectors," said Monica Malik, chief economist at ADCB, in the August 9 report.
"The next phase of the UAE’s economic recovery will be driven by the externally facing service sectors."
The UAE, a major international travel centre, said on August 3 it will ease restrictions applicable to six countries on its flight ban list to allow some residents stranded abroad to fly back to the Emirates.
The government said all vaccinated residents, as well as unvaccinated people in certain job categories, could seek permission to return from August 5. The decision includes people who are in India, Pakistan, Sri Lanka, Nepal, Nigeria and Uganda.
Last week, the British government also removed the UAE from its red travel list and upgraded it to the amber list, meaning that travellers entering most parts of the UK from the UAE do not have to pay to quarantine in a government hotel for 10 days.
Unvaccinated passengers arriving from amber-list countries need to isolate for 10 days on arrival in the UK but can be released after day five if they have a negative test result.
Travellers coming from countries with amber status, who have been fully inoculated using vaccines approved and administered in the UK, the EU and the US, do not have to self-isolate but must provide a negative Covid-19 test within two days of arrival.
"The UK was one of the top sources of tourism to the UAE before the Covid crisis. India has also been removed from the UK’s red list, which will be a positive for transits via the UAE," Ms Malik said.
The number of tourists to the UAE is also expected to increase during the cooler winter months with a full calendar of events.
"The recovery in tourism should be further boosted by more conducive weather conditions and the hosting of key global events," Ms Malik said, citing the Expo, the Indian Premier League cricket tournament and the T20 World Cup.
A higher number of tourists to the UAE would also be "positive for private consumption”, she said. Before the onset of the pandemic, non-residents accounted for about 23 per cent to 25 per cent of consumption, she said.
"The hospitality and aviation sectors will continue to be impacted by the ongoing pandemic, both global and regional, with a multiyear recovery outlook," Ms Malik said.
Various restrictions remain and the emergence and spread of new variants are key risks, the ADCB chief economist said.
"Nonetheless, the latest developments are positive for an externally facing and service-based economy such as the UAE’s non-oil sector," she said.
Dubai’s non-oil private sector economy improved at its quickest pace in a year in July "helped by a rise in customer numbers that boosted sales in the travel and tourism and wholesale and retail sectors”, IHS Markit economist David Owen said on Monday.
Hotels in Dubai recorded a surge in occupancy rates in June, boosted by Eid staycations, a pick-up in regional travel and hoteliers cutting prices to attract guests over the summer season, according to research by Emirates NBD and figures by hospitality data and analytics specialist STR.